The Multiple by Which the Commercial Banking System Can Expand

question 219

Multiple Choice

The multiple by which the commercial banking system can expand the supply of money is equal to

• A) the ratio of actual reserves to required reserves.
• B) the reciprocal of the federal funds rate.
• C) the reciprocal of the reserve ratio.
• D) the ratio of required reserves to actual reserves.

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Definitions:

Expenses

Costs incurred by a business in the process of earning revenue, which are not directly tied to the production of goods or services.

Accounting Standard-Setting Body

An organization that establishes benchmarks or rules for preparing and presenting financial statements and other related accounting practices.

Securities and Exchange Commission

The U.S. federal agency responsible for regulating the securities industry and ensuring public companies adhere to disclosure laws.

Proprietorship

A business that is owned and run by one individual, where there is no legal distinction between the owner and the business entity.